The Rachel Cruze Show - How to Outsmart Sneaky Retailers and Save Money

Episode Date: September 16, 2024

💵 Start your free budget today. Download the EveryDollar app! From monitoring your browsing history to making it even easier to spend, companies are always finding new ways to take more of your money. But you still have the final say about what you spend! In this episode, find out how to avoid spending traps and save your money for the life you want. In This Episode: ·      How to Save $4,000 Fast ·      How Airlines and Other Retailers Are Robbing You Blind ·      The $687 Billion Problem No One’s Talking About   Connect With Our Sponsors: ·      🏥 Learn more about Christian Healthcare Ministries. ·      🔒 Remove your personal information from the web and get 20% off your DeleteMe plan.   Listen to More From Ramsey Network: 🍸 Smart Money Happy Hour 🎙️ The Ramsey Show   💸 The Ramsey Show Highlights 🧠 The Dr. John Delony Show 💰 George Kamel 💼 The Ken Coleman Show 📈 EntreLeadership   Ramsey Solutions Privacy Policy Learn more about your ad choices. Visit megaphone.fm/adchoices

getting your mindset set to this idea of, hey, I'm actually going to start making changes in my life and put habits in my life. That's going to help me win with money long term and not just stay in the cycle of thinking month to month. And it really does help break that paycheck to paycheck cycle as well. You guys, welcome to this episode of the Rachel Creas Show podcast. I'm so glad that you're here. Listen, if you love this podcast, you love learning about money, make sure to leave a review. It helps us out so much. But today in this episode, we'll talk about dynamic pricing and exactly what that is, then we'll discuss the $687 billion problem no one is talking about. But first, I want to walk you through how to save $4,000 quickly. Take a listen.

So I think most people can agree that they need some kind of savings cushion, right? So here at Ramsey, we always recommend a starter emergency fund of $1,000 before you really do anything else. But I also know that this is easier said than done because a lot of people just feel like they're stuck living paycheck to paycheck. So if you're feeling this way and you need to make some progress when it comes to your savings, we're going to chat about that today. And specifically, I want to talk about how you can save $4,000 fast. And trust me, it's not as daunting as you might think. I also want to share what you can do after you reach that milestone so you don't lose momentum when it comes to taking control of your money. All right, first, why $4,000?

Well, according to the U.S. Bureau of Labor and Statistics, the average annual salary nationwide is $65,470. So if we took that number and subtracted the average income taxes, then divided it by 12 for the number of months in a year, then that means we are around $4,000, meaning $4,000 is what the average American is bringing home after tax. So it's essentially like having an entire month's salary saved, which is a huge goal and wonderful. But even if you're bringing in more or less, no matter what you make, I think everyone could agree that, yeah, an extra $4,000 can't hurt anyone. And think about this. Once you've paid off all of your debts and you focus all of your energy then on getting a fully funded emergency fund of three to six months of expenses, well, aiming for $4,000 as your first goal of getting there, feels more realistic and reachable, right? So that's what we're going to talk about.

How do you even get there? First, what I would say is to clamp down on your existing budget. You need to be very aware of where every single dollar is going. So tracking your budget is really key. And I recommend using every dollar because this is a great budgeting tool to help you know, hey, this is where our money's going and you can adjust your spending. And if you want to check it out, I'll make sure to put a link in the description for you guys. Now, take a close look at your spending habits and think, okay, where can we cut back?

Because, again, some of this, you guys, is just the rhythm of life that when you get in over and over and over and month after month, year, you don't really realize, oh, my gosh, where is our money going? And maybe if I take something out or I lower a category, we actually could be okay. You know, I even did this for myself. I kind of got in the habit of like, oh, yeah, I'll splurge on a shirt. You know, it's $15 here, $20 there. It's in the budget. It's fine. and then I gave myself 30 days where I'm not going to buy clothes.

And it's amazing when you just say, oh, yeah, I was kind of just kind of doing that. And again, I had some money budgeted, so it was part of the plan. But when you say, well, why is that a rhythm for me? Why don't I just stop? And you stop, you're like, oh, well, there you go. You know, it's even like streaming services. Maybe you got Apple, you know, Apple TV to watch a show, and now it's over and you're like, why are we still paying for Apple TV?

Like, let's cancel that, right? You kind of just end up in a rhythm. and what a budget does is it stops your rhythm to say, hey, take note of everything that you're spending money on and you might actually say, oh, yeah, I don't really need that. Or, wow, Starbucks is coming up a lot in the budget. What if I cut some of that out, right? So it is amazing what happens, that power and control that you have. Now, I know that food costs and eating out is a big one for people.

So maybe you meal plan and say, hey, let's say, you know, that we're going to eat in five days throughout the week or six days. And maybe you have one cheap meal where you go out. But like overall, you plan where your money's going. You plan what kind of meal you're going to have. And then you can say, yeah, let's do a cheap meal, you know, X amount of meals and maybe one meal we go a little bit nicer. Like, whatever it is, but you have a plan. All right, now to the next strategy. Boost your cash flow by taking a side hustle.

So side hustles, again, are, they're everywhere. And I feel like people talk about them a lot. But honestly, having a little bit of extra income coming in can make a really big difference. So, again, this can be any small job and outside. gig, maybe what you do for your primary job, you do on the side and do some freelance work and make some extra money that way too. But you can drive for ride share apps, you know, you can do Instacart, you can do food delivery, like all the things. There is ways to pick up some extra shifts or jobs to make an extra, you know, $10, $20, $30 in your pocket. I mean, especially when it

comes to house sitting, dog sitting, babysitting, all of that are great options and people will pay a lot for those. So side hustles, like tutoring, music lessons, or even coaching for a local kids' sports team or roughing, you know, these are great ways to earn some extra money if you're interested. So again, getting some of that extra money towards that $4,000, it's for a short period of time. You won't do it forever, but you can earn some extra cash, which is huge. Let's say you dedicate just 10 hours a week to driving it for a ride share app and you earn $20 an hour. Well, that's an extra $800 a month. And it doesn't even include the money that you're saving by sticking to your budget and taking out some money that you're spending that you aren't going to

spend anymore and that's going to go towards savings, all of that, it's amazing. So we've talked about strategies to help you reach a $4,000 savings goal. But what if you're just starting out on your financial journey with the baby steps and you're not quite there to save $4,000? So if you are starting off on your financial journey, make sure to check out our seven baby steps. So baby step one is a $1,000 emergency fund. Baby step two is paying off all of your debt but your house. And baby step three is a fully funded emergency fund of three to six months of expenses. So regardless of where you are in any of that, some of these tips for saving $4,000 can help you when it comes to those baby steps. All right, you guys, there you have it. Saving $4,000 might sound daunting, but again,

with budget adjustments and a little bit of a side hustle and kind of looking at everything when it comes to your money, you can really do this. I mean, it is an amazing thing. So today I'm going to talk about a common theme that I keep seeing in the marketplace, and that is called dynamic pricing, which sounds very official and trustworthy at first, right? But also, I'm starting to wonder if it's a fair strategy. So today I want to explain what it is, talk through how it's showing up in our spending, and walk through some solutions for how to deal with it on a practical level. Now, the first point is what is dynamic pricing? So according to Oxford, it means varying the price of a product or service to reflect changing market conditions. So the most of

the most common example of increasing the price of something during times of higher demand. That's supply and demand is kind of what you learn in Econ 101. Now, you may have also heard this as a surge when it comes to pricing or demand pricing. So those are also some terms being thrown around. But recently I saw an article about Wendy's customers pushing back on their decision to raise food prices during popular meal times. And if you listen to Smart Money Happy Hour, you know that Wendy's is a very special place in my heart. The spicy chicken sandwich is one of a kind. I love it. Now, customers were outraged that their burger started costing a buck or two more at one time of the day versus another. Now, I'm sure some

people are thinking, well, if people are that worked up about a $6.99 menu item costing a dollar more than maybe they've got bigger things to worry about. Listen, I hear that. That makes sense. But also, you're like, Wendy's, it's not fair. If I come at 6 o'clock, should that be different and when I come at 3 o'clock, it's the exact same food, right? So listen, I get it. I mean, we can all sometimes feel unfair that there are some things that big corporations take advantage of when it comes to people

and when we go shopping and all of that. But the truth also is that when you're in a fast food drive-thru, you clearly need a quick and affordable meal. And when that's openly used against you, it can kind of feel like a cheap shot. And apparently, after hearing this feedback from customers, Wendy's retracted their new policy to raise price. during busy times and offer discounts during slower times. Listen, we love when businesses listen

to their customers, right? I mean, it's great. But unfortunately, this isn't the only example of dynamic pricing that we're seeing these days. So now let's look at some other ways that it's showing up. And to make it a little bit of a game after I reveal each example, I'll kind of give a yay or nay based on what I think. So you can play along. Let me know in the comments. All right. First up is something that I noticed all. the time, especially in Nashville, and I'm sure other cities too, but it's just the wedding tax. So as Pinterest and social media become more and more popular over the last decade, having a picture-perfect wedding has turned into a much bigger deal than it was 15 years ago when Winston and I got married.

So again, I mean, we, oh, golly, our wedding, y'all. I mean, there's some things you look back on, you're like, I would do that again. I'd probably still have my dress. I still think my dress was pretty. But I made my bridesmaids wear a champagne color, and it was just so unfortunate. for everyone involved in a December wedding, so I apologize wholeheartedly to them. But it was like this like gold-red vibe that was like very much going on in like 2008. And yeah, unfortunately, my wedding got caught up in that.

So there are some trends we wish didn't happen, but they did. Now, listen, the wedding industry, though, they are smart. They know that everyone wants a insta-worthy wedding and bachelorette party and shower and like all the things with balloon arches and all. And so what happens, though, is that just putting the word wedding in front of something, people can kind of start taking advantage of. So, like, venue, flowers, catering, music, photographers, hair, makeup, drinks, you name it. If you got wedding in front of it, it's going to be more.

People started calling this the wedding tax because the cost of services are marked up up significantly because it's for a wedding. Now, on one hand, I understand there is going to be an upcharge to compensate, you know, on things like travel time and gas money and all of it, absolutely. Or say your hairstylist usually works Mondays to Fridays, but your wedding is on a Saturday, so they're going to give up part of their weekend. So, yeah, they're probably going to charge more for that. Again, supply and demand, totally understand.

But also, some venues will raise or lower their prices on certain days because they know they're going to make more, obviously, on weekends. Or even, you know, cakes. If you say it's a wedding cake, they have shown that it is significantly more expensive because of that. So again, you're going to get these price spikes depending on if it's a wedding or not. So I'm going to say nay because I have heard so many people planning a wedding and using vendors that are not wedding vendors, but they're just like going roundabout ways to get flowers or to get a cake and all that. And it's not very expensive. But suddenly when you go into the wedding part of

everything, it's more expensive. All right, the second example that I see that we all know all too well our concert tickets. And we were all crushed last year at T. Swift's ticket prices. I mean, there was so much, so much money. But listen, it's Ticketmaster who we should have beef with. I mean, monopolies never play fair because they know they can jack up prices. And, you know, it is what it is. And you're like, oh, my gosh. And then third parties are selling for hire and all of it. So I'm going to give this a nay because in Europe, and I don't have all the statistics. but from what I've heard is it was significantly cheaper because they were not allowing all of this crazy pricing to happen within third parties or within the main ticketing system.

And so people were able to go and go to a concert even though they're not paying thousands of dollars, which is great. You know, you want everyone to have an experience and not feel like you have to spend like crazy amounts of money for that. So I'm going to give this one a nay. All right. The third example is it ride sharing apps like Uber or Lyft. and they do jack up prices depending on certain locations and certain times of the day. So, for example, if there's a massive sporting event, the cost of the ride is going to be more when it ends. Or have you ever noticed how expensive rides are to and from the airport specifically? So listen, they know that you are desperate for them, so you are going to pay them.

Okay, I am going to give this one, I'm going to give it like a yay medium, because I do think if I am a driver and I'm going to have to go to down to, town Nashville, let's give Taylor Swift's example, right, to a Swifty concert where tens of thousands of people are coming out of this concert. It's going to be chaotic. It is. Like, your level of stress is going to be higher to be like, okay, I got to find the person, the rider, all of this. You're sitting in way more traffic. It's chaos and crazy. And because of that, that's going to take more energy from you as the driver. So I could see it you're having to work more because of that. So that's one reason I would say, I get it. It's annoying. You know, if you're the person using the app, you're like, dang it, why was it so expensive to get home? But I do think the more inconvenient a situation is for someone, the more they can charge for it. And I think I'm okay with that. I get that. All right, the fourth example is still a little bit of a mystery that I can't quite figure out if it's legit because I've seen evidence on both ends of this. But it's the idea that the algorithm of the internet is now working against us. So obviously, we've all noticed in increase in social media marketing. We mentioned a product once on our walk with a friend and suddenly

on Instagram, like, there's an ad for that thing. Or I even will do just the add-to-cart trick where I'll go shopping on a website and I'll just add stuff to the cart that I think's cute, but I won't buy it. It just kind of feels like I'm shopping. Well, now what people are saying is that these websites actually know your data and they actually jack up prices knowing that you are interested in an item, which is just wild. So again, these websites are adjusting prices for the items that you're interested in. And I've seen people on the internet claim that they, you know, will check a flight price on the same website three times in one week and it's different every single time. And sometimes if you're looking for the same flight, it actually ends up going up and up and up, and it doesn't give you a lower price because they know that you're looking at it. So, again, I don't know if this is just coincidence or if this is a bargaining tactic or if this is a bargaining tactic or if this is a,

This is the Internet's doing what the Internet does with all the algorithms, but it is happening. So, I mean, I'm going to have to go nay on this one too. I'm like, man, just because you know I want it, you're not going to give me the sale price or give me a lower price. I mean, that's not fun. That's not fun at all. But listen, no matter what you think about, the marketing strategy that's out there, the good news is that in the end, you still get to call the shots when it comes to your money.

And so having the control and the plan on knowing what you're going to buy, when you're going to buy it, it really does give you some power over what's going on out in the world, right? So if you have the money budgeted, you know what's going on, you can feel peace about making those purchases, regardless of the marketing strategy and the surging prices and all of it that is going on. Now, if you're feeling the pain of constant marketing tactics or even just regular price increases on a daily basis on daily necessities, the best thing you can do is to have a budget. My favorite app is Every Dollar. This is the budgeting app that I use, that Winston uses, and it is fantastic. So you can go to every dollar.com slash Rachel to get started today for free, and literally it will take you a few minutes to set up your first budget, and it is amazing. I want to talk about an insanely expensive problem that more Americans need to take seriously. All right, we all know that the national debt is out of control,

and people are living paycheck to paycheck because of their deal. debt payments. But according to a recent CNBC report, a certain kind of debt went up by 1100% in just two years. So today, I want to unpack this so that you can be aware of what's happening, and I also want to offer some solutions for you to try. And stick around until the end, because I'll share the number one way you can avoid this marketing trap that almost always evolves into debts. All right, first and foremost, let's do a little news update with Rach. You ready? So if you've shopped online at any point in the last few years, I'm sure you have seen Buy Now Pay Later options at checkout. Buy Now Pay Later is an alternative pay option where you can actually postpone the full

payment and stretch it out over four installments, aka you're going into debt when you're doing that. And usually it gives you the option to pay the total over the course of several weeks or even months. And like most money traps initially, you're like, well, that's pretty helpful, isn't it? But remember, you guys, everything is a business. And most retailers aren't sitting around thinking of ways they can just help you and make your life easier and not do anything good for themselves. Let's be honest, they are thinking how they are going to make money because they are sitting around thinking, okay, if we can get this person, this customer to spend more money more and more often, that's good for us. So that is why services like Klarna or Afterpay have become so popular,

remember over 1100% more popular like we said earlier just continues to increase and listen they are winning because you are buying things with money that you don't have and you feel like you're winning because you don't have to lay down a lump sum of cash right there at checkout so now some of you might be thinking but rachel it's zero percent down i mean what is the harm listen all debts okay, regardless of what the interest rate is, regardless of what the payment and installments are, it is all a trap to get you to spend more money. That's what it is. Even people that have a credit card and say, well, I paid it off at the end of the month. Statistically speaking, they spend more throughout that month than if you just paid with your own money.

And the same is true with buy now, pay later. You may not see all like the fees or the interest or all of that up front, even though some of these you get charged out later if you miss a payment. But overall, you're just thinking, well, this is good for me. But what happens is that you over time, pay for these things, and on the front end, statistically, you're going to spend more, add more to your cart, believing that, okay, I can just take this one installment and I'm fine, and I'll be fine over the next four months. So you end up spending more. It's psychology, it's what we see. But when you spend your own money, you guys, there's something about saying, okay, I only have this much to spend, and that's what you spend, and that's it, which is beautiful.

Now, people love to argue with Ramsey and feel like we overreact to things sometimes, but even major news outlets like CNBC are calling this out. And their words, it said, where there are loans, there is debt, and households are in more debt than we even know. And since this is relatively a new form of debt, economists are still trying to wrap their heads around the scope of this payment trend. But again, the numbers are astronomical. So currently, it's a $50 billion industry, but by 2028, by now pay later transactions could

reach $687 billion. So clearly this is a growing issue in real people's bank accounts. And over time, again, it is normalizing this new type of debt and the consequences are getting worse. So now that we've broken down some facts, and before I share my number one tip down the slippery slope, let's talk about a few things that I want you to keep in mind. Number one, just because there is no official paperwork doesn't mean that it's harmless. So it can just feel okay because it's just right there at checkout. It's no big deal, right? Okay, I'll just take it over four different payments. But again, what you're forgetting about is, yeah, technically you are in debt. And if you miss some of those installments, depending on the company, there's back interest that has to be paid. There are more fees,

more charges. All of this occurs if you miss a payment. And again, just the idea that when you spread it out over four payments, you're going to end up spending more. So it may feel harmless because it's just there at checkout, but it is a form of debt. Number two, businesses are not going to try just to help you out out of the goodness of their hearts. Okay, they are trying to make money. And when they see that they can make money, aka, you are spending more money because of services like buy now, pay later, they are going to promote those services. So you're going to see them more and more and more. You're going to see more companies starting this. You're going to see it more at checkout when you're doing online shopping because they are making a crap ton of money off of you. And so they're succeeding

and they're going to keep doing it. Number three, if you don't have all the money that you need today to afford something all at once, you can't afford it. And there's an old quote that broke people would ask, okay, well, just how much a month? And wealthy people ask, well, how much in total? And again, you may be thinking, well, of course, wealthy people would ask that because they have the money for it. But the idea is that you're in this mind pattern of saying, hey, if I don't have the money for it, I'm not going to buy it because, again, statistically speaking, you spend more with just the total amount when you go in payments and you end up spending more on interest. So getting your mindset set to this idea of, hey, I'm actually going to start making changes in my life and put habits

in my life. That's going to help me win with money long term and not just stay in the cycle of thinking month to month. And it really does help break that paycheck to paycheck cycle as well. All right, number four, who wants to pay for something that they've already used or that they're not fond of anymore? Kind of like what we just talked about. It's this idea that you may buy something and then two months later the season changes. You're kind of bored of it. And you're still paying on it. Even worse, you think about food that you've already eaten and you're still paying on it.

A movie that you've already seen and you're still paying on it. I mean, that's what ends up happening. We already are instant gratification creatures of habit. It's just like, oh my gosh, can I have this now? Okay, okay. And then you look up two, three months later. And it's like, oh, yeah, I bought that thing. And you kind of forget about it.

The excitement has dissolved and you're still paying on it. So again, save up and pay for things. Okay. So what do we do with all this info? Well, my number one tip for avoiding buy now, pay later is sticking to a monthly budget. This is it. Anytime we talk about spending money, you guys, I would probably always bring it back to the budget because it is the thing that you have to have.

this spending plan that you have to have to be intentional with your money. And it allows you then to spend within your means. It allows you, I think, to be a responsible adult and to know, here's my limit, here's my boundary. But within that, you can enjoy it. You can have money set aside. I'm not saying to never go online and go shopping. But when you do it, you say, okay, yeah, here's the money that I have and you can actually have more freedom spending it than the burden of thinking, oh gosh, can I afford this? This is okay. And all the questions come up. you do it guilt-free, and it's way more enjoyable to live your life financially like that. Yep, buy now, pay later, you guys. Just skip it. Just go right to check out and pay in full.

All right, you guys, make sure to subscribe to this podcast and share it with all your friends and your family if you know that they want to handle money the right way. Well, thank you guys so much for listening. And remember to take control of your money and create a life you love.